Last month the penny finally dropped for me. After writing about real estate best practices for the last year and a half, it looks as if I am finally making a dent. My blog has been viewed over 34,000 times by agents from coast to coast thanks in part to a great Twitter, Facebook and LinkedIn following and two weeks ago, with their help, I won a position as a Director at Large for the Toronto Real Estate Board. All and all a good year so far.
Most of my material is gratefully supplied by the agents at Bosley Real Estate but I have to thank the management team who are always available to discuss various situations and provide invaluable insight and input to my topics. What is especially exciting is that I am now getting calls from agents from other companies asking me to write about their stories. Here are a few from the last month;
A few weeks ago I got an interesting call from another agent (Agent Charlie). He was in a full panic because a buyer had filed a RECO complaint against him. Here is the story; Agent Albert listed a house owned by an estate. Agent Bob sells the house to Client A who spends a great deal of time and money renovating the house to flip. Client A enlists Agent Charlie to list the house which sells quickly to Client B through their agent, Agent Donald. Several months after Client B moves in, he finds out, through a neighbour, that the original owner died in the home. Being deeply superstitious, Client B decides to complain to RECO because Agent Charlie and Agent Donald didn’t disclose this stigma.
If you are like me, you will probably see a lot of holes in this case. It seems that Agent Albert probably should have asked some basic questions when he first took the listing but what about the stigma? RECO’s stance is clear; Agents have an obligation to disclose any material fact that they know could affect a buyer’s decision to buy, but the reality of the situation is that it is not unusual for people do die in their homes of natural causes. While Agent Albert should have disclosed the death to Client A I think it is fair to say that a death from natural causes is not a stigma that would have a negative effect on value. Unlike many States in the U.S. and a few provinces in Canada, Ontario does not consider this a stigma. The Toronto Star has an interesting article on the topic here; http://www.thestar.com/news/article/1062218–buyer-unaware-of-orangeville-home-s-grim-history-abandons-sale
Yesterday I received a Twitter message From an agent who was negotiating on a lease. The listing agent called him and said that the owner was going to accept his offer. The next day while waiting for the paper work the listing agent called to say that the owner had accepted a higher offer. So it brings up the topic of verbal acceptance. It is important to remember that verbal acceptance isn’t worth the paper it is written on. Several years ago I had my house listed for sale. A good offer came in and with a sign back or two it looked like we had a deal. The agent had communicated to her clients, by phone, one small change that needed to happen so I made the changes, acknowledged the offer and the selling agent left to get it signed by her clients. An hour later she returned to say that her clients had changed their minds. A clear case of buyer’s remorse had set in.
The take away is clear. A deal is a deal only when all the paperwork is duly signed. It also seems evident, especially in today’s market that clients (Sellers and Buyers) can and will change their mind. Remember that if an offer is not fully executed and a better offer comes in, a Seller will use your sloppiness to accept a better offer. So what can you do? Have a strong offer, have your clients close by to work within the set time frame (irrevocable time) and have a good deposit that a buyer isn’t likely to walk away from.
Mastermind for June 20th. Chattels and Fixtures in Good Working Order and Status Certificate Delivery
Okay, we had one of our biggest Masterminds of the year today. I’m going to go out on a limb here and say it was everything to do with the great learning and camaraderie that exists at my office and absolutely nothing to do with the fact that it’s beautifully cool inside. Anyway if you missed Mastermind you missed some great discussions on chattels and fixtures in good working order and condominium status certificates.
So, you sold a home and you have included in your offer a clause that says the seller warrants that all fixtures and chattels will be in good working order upon closing. A week before closing your clients go for a visit and decide to pull one of the roller blinds down in the kitchen. The only problem is that it won’t go back up. It seems like it is broken. So being the good agent that you are, you call the listing agent and let them know, as nicely as you can, that the blind is broken and would they please have the seller fix it before closing. The seller responds, through their agent, that you can go jump in the lake. That blind was broken when they bought the home three years ago. Naturally we got into a debate about what “good working order” means. It seems everyone had a different opinion. The blind is meant to keep out the sun, and it certainly does a good job at doing that, even if you have to hand-roll it up every time. So what is the expectation of working order? How do you define “working”? For instance a slow draining sink still technically works but is it in good working order? That depends. So how can you protect your client? Is it fair to walk through the house or condo and video every square inch? Is it your job to make sure every door handle works or are you better off explaining to a buyer that they are buying a “used” home that may have quirks and quarks to it? Someone in the group summed it up nicely with the phrase “welcome to home ownership”.
Next up…Status certificates. One of my agents asked what to do about the fact that he ordered a status certificate 10 days ago and he didn’t think it was going to arrive in time. Naturally the first thing that pops into our heads is to extend the condition but did you know that if a management company doesn’t deliver a status certificate in the allotted time it is deemed that, 1. There is no default in the payment of condo fees 2. There has been no increase in condo fees since the existing budget in place at that time and 3. There has been no special assessment since the date of the budget. So what if it turns out that there IS a problem? The understanding is that the management company would be responsible. Check out section 76(5) of the soon to be outdated Condominium Act. I want to thank David Feld for the quick responses to our questions. You may not know this but most status certificates are available on-line now. Check out Conduit https://www.statuscertificate.com/ for more details.